The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Kolkata Bench observed that service tax is leviable on right to use of mining of natural resources (Sand) and noted that there is no tax exemption after 01.04.2016.
The Government of Bihar awarded to the respondent the right to use mining of minerals, oil or gas in respect of sand ghats of Patna, Bhojpur and Saran of the State of Bihar. The right to use natural resources (Sand) was assigned for the period 2015 to 2019 on 29.12.2014.
As per the settlement agreement, the amount has been fixed for the year 2015 and a 20% increase was fixed in respect of the subsequent year 2016-2019. The fixed percentage of the settlement amount so fixed must be remitted as per the prescribed dates.
The two instalments of the settlement amount of 2017, were payable on 15th December 2016 and 15th April 2017 i.e. after 2016. Therefore, the Revenue was of the view that the right to use the natural resources for the period 2017 was not assigned before 01.04.2016, therefore, sought to deny the benefit of Mega exemption Notification Sl. No.61 dated 13th April 2016.
The Mega exemption Notification Sl.No. 61 dated 13th April 2016 made applicable wherein if any right to use was assigned after the First date of April 2016 becomes taxable.
Therefore, proceedings were initiated against the respondent, M/s Broad Son Commodities Private Limited, by the issuance of a show-cause notice. The matter was adjudicated and the Adjudicating Authority held that the right to use the impugned natural resources was assigned for the period 2015 to 2019 much before 1st April 2016.
The Authorised Representative for the Revenue submitted that in terms of Rule 7 of Taxation Rules, 2011, the terms for payment of service tax, the liability of the respondents for the settlement amount payable for the period from 01.01.2017 to 30.06.2017 arose on 06.01.2017. In those circumstances, the respondent is not entitled to claim the benefit of exemption Notification Sl.No. 61 dated 13th April 2016.
The Coram consisting of Ashok Jindal, Member (Judicial) and (K.Anpazhakan), Member (Technical) observed that “On examination of the said Notification, right to use assigned by the Government or the local authority before the 1st April 2016, is entitled to exemption from payment of service tax. Admittedly in the instant case, the right to use natural resources (Sand) was assigned on 29.12.2014, which has no concern with the terms of payment.”
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